Category: Startups

Start up culture and entrepreneurship. The ways of thinking from a startup, like lean startup, agile development and business model canvas can also be applied to big companies as well.

Best equity crowdfunding platforms in New Zealand

Equity crowdfunding allows companies to raise capital from their customers, community, and external investors. Getting outside investment can help a company grow faster and expand into new markets. More and more companies are experimenting with equity crowdfunding as a way to raise capital to grow their operations.

The equity crowdfunding industry in New Zealand has been operating since 2014 when the process was legalised and has matured considerably in that time.  The major platforms in New Zealand have started to find their feet and to differentiate themselves from one another.

Equitise

The Australian equity crowdfunding legislation has been slow to come into force, so Australian platform Equitise has been trying out their model in New Zealand. They have built a reputation for focusing on early-stage tech companies and high-risk food and beverage companies. Examples include 1Above rehydration drink and Skins performance sportswear. They allow companies to raise privately and publicly from both big and small investors.

Equitise appears to have completed around $11 million in offers in New Zealand. They charge an upfront fee and 7.5% of the funds raised. You can see their latest stats and fees on their website: Equitise

PledgeMe

PledgeMe allows companies to offer rewards, debt or equity to the crowd. The platform tends to attract social enterprises and early-stage companies with a strong fan-base. The platform is simple to use and companies go through a crowdfunding training program which means that the campaigns are generally well put together. The campaign videos from their successful campaigns are well worth a watch. Successful campaigns include Parrotdog, Yeastie Boys, and Eat My Lunch (a debt campaign).

PledgeMe appears to have completed at least $12 million in offers in New Zealand. They charge 6.5% for equity campaigns plus another 2.5% on any pledges that use a credit card. You can see their latest stats and fees on their website: PledgeMe

Snowball Effect

Snowball Effect was the first platform to launch in NZ. Snowball Effect is focussed on larger raises for more established companies. They generally work with medium-sized growth companies in the tech and consumer space. Snowball Effect has also been conducting private offers targeting their own database of high-net-worth and sophisticated investors. They have recently added a share registry service and an independent director matching service. Successful offers include Zeffer cider, SOS beverages, and Invivo wines.

Snowball Effect has completed around $40 million in offers in New Zealand. They charge an upfront fee and 7.5% of capital raised. You can see their latest stats and fees on their website: Snowball Effect

Other platforms

Other platforms include AlphaCrowd, AngelEquity and Crowd88. Crowd88 is another Australian platform that is expanding into New Zealand and AngelEquity are the online part of Tauranga-based Enterprise Angels so it is only open to wholesale investors.

Choosing the best equity crowdfunding platform for you

As an entrepreneur, it’s worth doing your homework before choosing a platform to work with. When considering an equity crowdfunding platform to raise capital on, there are several things to look out for:

  1. How well does the platform know their investors?

If your offer will just be spammed out through a bulk newsletter, it won’t get as much traction as a platform that will do the hard yards (behind the scenes) to help prepare and promote your capital raise. To do that, they need to have a pretty sharp knowledge of their investor base. Ask about their internal CRM, investor relationships, and how proactive the platform will be in helping promote your offer to their own investor base.

  1. What do the big fish think?

Large investors make a big difference to a successful capital raising. Even if you offer shares to the general public, you’ll likely still need some large investors such as angels, venture capital investors, or a private equity firm. Find out whether your platform can play alongside the big kids. Look for examples of large investors who have invested into offers on the platform.

  1. How much has actually been raised through the website?

Some of the platforms count offline and pre-committed investments towards their published totals. The FMA has recently been cracking down on this practice, so most of the good platforms know exactly how much did and did not come through their coffers. Ask about the average investments sizes, how many people invest in each campaign, and how many people in each offer are repeat investors.

  1. How easy will it be for your crowd to invest?

If you want your customers to become investors, then the platform needs to provide a simple sign-up process and a good experience for first-time investors. Try signing up for each of the platforms yourself and ask them about how much effort they have put into streamlining important details like payment processing and compulsory anti-money-laundering checks.

Overall, equity crowdfunding can provide a great source of capital investment, but you need to choose the right platform that suits you and your potential investors. The industry is growing in New Zealand as a viable source of capital for growing companies.

Disclosure: This article was written while working at Snowball Effect. The information in the article is based on publicly available information. You should consult the FMA’s information on equity crowdfunding for issuers before deciding which platform to work with. 

Startup Community Values

When you work in a startup, the wider community of other people who are also working in startups is incredibly important because you need a peer group to hang out with. Lawyers like to hang out with lawyers, doctors like to hang out with other doctors and people who work in tech startups like to hang out and swap war stories.

“Are you a Java developer?” The man in a suit at my first startup event in London asked me briskly. “Because I’m looking for a Java developer.” I stumbled and stuttered a little because we hadn’t even finished exchanging pleasantries. He sensed that I wasn’t what he was looking for and turned his back on me sharply to disappear into the throng. I had only just arrived in London and I was used to the casual, and friendly way that people networked after-hours over a beer in New Zealand.

The London tech scene was a shock to the system for me because the city is much larger and people are much more focused on their own personal business objectives. But after a while, I began to find my tribe. It took several months of coffees, meetups and missed connections, but eventually the fabric of the London startup ecosystem started to make sense for me. By the time I left London in 2014 I was sad to leave behind so many good friends and a wide network of people that I knew and admired.

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How to get the most out of Startup Weekend

Startup Weekend Auckland is a full weekend event in which small teams come together and build an entire startup before pitching to a panel of investors and judges on Sunday evening. The teams don’t necessarily stay together after the weekend and usually the main benefit is the learning and the experience gained rather than any particular startup that gets built. The exercise of identifying a market problem, creating a solution and then packaging it all up into a website, mobile app and investment pitch is an adrenaline fuelled roller coaster.

Startup Weekend Logo
It’s amazing what you can get done with a highly motivated team in a short period of time and many successful companies have come out of startup weeekends around the world. But more important is that lessons that individual participants have taken back to their own startups or corporate jobs to make these organisations more flexible, agile and customer centred.

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Equity Crowdfunding is the Ultimate Customer Loyalty Program

Alex Tynion from SeedInvest and I sat down recently to talk through some of the things that we’ve learned from helping the first few companies who have “tested the waters” under the new Reg A equity crowdfunding rules. Regulation A is an equity crowdfunding rule that allows private companies to raise money from the general public. So far, we have helped three companies on SeedInvest to reach over $10M in indicated interest from over 2,000 people each.

There are some common mindsets and practices that we’ve seen across the companies that have been most successful with equity crowdfunding.

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The Moral Hazard Created by Abundant Startup Funds

I vehemently disagree with a lot of this article, but it’s so well written that I just had to share it. Murad Ahmed from the Financial Times neatly captures the changes that are happening in the London startup scene and the increase in angel investing and venture capital in Europe.

For 4 years I lived through the heyday of this boom in UK startup funding. But my experience was that to go along with the increase in investors, there has been a corresponding increase in startups so that the two have balanced each other out. The good startups that get funded by good investors are still dedicated, hardworking and humble.

I’ve reproduced the article from the Financial Times site below because the article is so important as a record of a certain time in London’s startup scene and it would be a shame to lose it. You can see the original article, if it’s still visible on the FT site.

Enter FT journalist Murad Ahmed…

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Dave McClure on equity crowdfunding

Brant Cooper and Patrick Vlaskovits interviewed VC investor Dave McClure as part of their book the Lean Entrepreneur. The Lean Entrepreneur was published in 2013 and I picked up a copy after seeing Patrick Vlaskovits speak at the Innovation Warehouse in London.

Patrick has a really practical and grounded approach to innovation, growth hacking and the world of startups. He’s been an inspiration to me and has contributed a lot back to the community through mentoring and coaching various startups.

After reading the book last year, I got a copy of the audiobook on Audible. Some of the checklists and bullet-points don’t survive the transition to audio that well, but overall the audiobook was excellent and I recommend it alongside the Lean Startup as one of the key audiobooks for entrepreneurs and investors.

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Mark Suster and Clayton Christensen on equity crowdfunding

In 2013 Mark Suster a leading VC investor and Clayton Christensen a leading business author sat down at Startup Grind to talk about disruptive innovation and startup investment. Their conversation touched briefly on the subject of equity crowdfunding. Both Mark and Clayton are extremely cynical about equity crowdfunding. Some of their concerns are sensible questions about an emerging industry. But what they were secretly doing was arguing for the old model. I’m a big fan of Mark’s blog and Clayton’s books but they’re wrong about the disruptive potential of equity crowdfunding.

VC investor Mark Suster and business author Clayton Chistensen at Startup Grind.
VC investor Mark Suster and business author Clayton Chistensen at Startup Grind.

By betting against against equity crowdfunding, Mark Suster is betting against the internet. I believe the internet will do the same thing to early stage finance that it does to all industries. Namely, make them more competitive, connected and democratic.

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Equity crowdfunding at Seedrs

Seedrs provides a tool that startups can use to raise capital from their friends, family, customers and the crowd. This process is often called “equity crowdfunding” because it’s like Kiva or Kickstarter, except that the investors get equity in the company instead of a product or a loan. In January 2014, I joined Seedrs as part of the marketing team.

Seedrs Team Wired Magazine
The Seedrs team have been featured in Wired, TechCrunch, the Financial Times and the Wall Street Journal.

At the end of last year, Seedrs raised 2.58 million pounds from over 900 investors using their own platform. That means that in my new marketing role, I now have over 900 bosses. I feel very accountable for the success and growth of the business. In this blog post, I want to share two main things about my new role, the expanded view of marketing that we’re taking at Seedrs, and the way that we’re incorporating lean manufacturing habits and processes into our team culture.

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Helping startups with equity crowdfunding

Equity crowdfunding is a new way of raising capital for startups. Kickstarter has proven a successful model for crowdfunding an idea (by pre-selling the product). Equity crowdfunding takes this further by allowing the crowd to buy shares in the company itself. The volume of alternative finance for startups, entrepreneurship and innovation is growing rapidly.

Value Proposition Canvas Hackathon
During the HackHumanity hackathon I realised that startups need help with equity crowdfunding.

Crowdfunding is a delicate balance of describing the product, the team, the business and the investment opportunity. Each of these need to be communicated in a clear, compelling and persuasive way. Often the teams with the best technical skill are not the best communicators.

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